Operating Budget Summarymgaleg.maryland.gov/Pubs/BudgetFiscal/2021fy-budget-docs...and engineering...

U10B00

Maryland Environmental Service

For further information contact: Andrew D. Gray Phone: (410) 946-5530

Analysis of the FY 2021 Maryland Executive Budget, 2020

1

Program Description

The Maryland Environmental Service (MES) is an instrumentality of the State. MES provides

technical services including engineering, design, financing, construction, and operation of water supply

and wastewater treatment facilities. MES also provides similar services in the area of hazardous and

solid waste facility management, including sanitary landfills, incinerators, and resource recovery

facilities. Additional services offered include sludge and dredged materials management, recycling and

marketing of end products, regulatory monitoring, and renewable energy needs servicing. MES

operates on a fee-for-service (FFS) basis. Four goals guide MES’s activities: improving the

environment; improving infrastructure to convey and treat water and wastewater in the State; working

more safely; and providing excellent customer service and satisfaction.

Operating Budget Summary

Maryland Environmental Service Fiscal 2017-2019

($ in Thousands)

2017 2018 2019

Change

2018-2019

Total Assets $88,907 $85,412 $91,767 $6,355

Total Liabilities 62,671 57,338 62,010 4,672

Total Net Assets $26,236 $28,074 $29,757 $1,683

Total Revenue $165,784 $155,299 $161,121 $5,822

Total Expenditures 163,207 152,868 159,699 6,831

Operating Income $2,577 $2,431 $1,422 -$1,009

Between fiscal 2018 and 2019, MES’s net operating income decreased by $1.0 million for all

operations excluding the Midshore Regional Landfill Private Purpose Trust Fund. According to

MES’s audited financial statements, the reasons for the decrease include increased personnel

costs, including benefit costs, and upgrades to information technology (IT) hardware and

software programs for agencywide efficiency enhancement.

U10B00 – Maryland Environmental Service


2

MES’s Fiscal 2019 Financial Position

MES breaks down its revenue by fund sources and type of business activity. Exhibit 1 provides

an overview of fiscal 2019 revenue by fund source and shows that approximately 95% of MES’s

revenue comes from State and local government. In terms of its relationship with the State, MES has

two arrangements: (1) reimbursable projects are related to Executive Order 01.01.1971.11 and the

Board of Public Works directive that MES operate wastewater and drinking water plants for State

agencies; and (2) contractual projects for which MES has a contract with a State agency to do the work.

Between fiscal 2018 and 2019, MES’s State government revenues increased by $6.7 million, and local

government revenues decreased by $3.0 million. The State revenues increased due to the Cox Creek

Expansion Projects, which was offset partially by decreases due to completion of fiscal 2018 projects

including Dundalk Marine Terminal Dredging, Fairfield Terminal Wet Basin Filling, and Kurt Iron

Slip cut-off dike construction. In fiscal 2018, local government revenues decreased due to the

completion of a project for Prince George’s County implementing an organic waste composting project

using a Mega Heap Bunker System – an organic waste composting system installed by Sustainable

Generation at the Prince George’s County Western Branch facility.

Exhibit 1

MES Revenue by Fund Source Fiscal 2019

($ in Millions)

MES: Maryland Environmental Service

Source: Maryland Environmental Service

State

$104.3

65%

Local Government

$48.1

30%

Private

$5.5

3%

Federal

$0.1

0%MES

$0.2

0%

Grants

$2.9

2%



3

Exhibit 2 provides an overview of fiscal 2019 revenue by business activity type and shows that

the largest three categories are dredging, water/wastewater operations, and solid waste. These

three business activity types account for 64.9% of MES’s revenue. In recent years, MES has entered

the market for energy efficiency and renewable energy.

Exhibit 2

MES Revenue by Business Activity Type Fiscal 2019

($ in Millions)

MES: Maryland Environmental Service


Financial Changes

MES’s operating income decreased by $1.0 million between fiscal 2018 and 2019 because of

increased personnel costs, including benefit costs, and upgrades to IT hardware and software programs

for agencywide efficiency enhancement. MES’s revenues increased by $5.8 million between

fiscal 2018 and 2019 as shown by the revenue by business type activity in Exhibit 3. This reflects the

following.

Dredging

$52.6

33%

Water/Wastewater

Operations

$27.7

17%

Solid Waste

$24.3

15%

Environmental

Monitoring

$20.6

13%

Recycling

$18.0

11%Energy Co-generation

$7.2

4%

Hazardous Waste

$5.0

3%Grants

$2.9

2%

Environmental

Engineering

$2.6

2%

Other

$0.4

0%



4

Exhibit 3

Revenues by Business Type Activity Fiscal 2015-2019

($ in Thousands)

Business Type Activity 2015 2016 2017 2018 2019

Change

2017-2018

Change

2018-2019

Environmental Dredging and

Restoration $53,325 $41,666 $50,742 $44,243 $52,584 -$6,499 $8,341

Recycling 14,295 16,001 16,834 15,714 17,989 -1,120 2,275

Environmental Monitoring 14,596 16,499 17,580 19,384 20,584 1,804 1,200

Grants 2,663 2,061 2,092 1,699 2,867 -393 1,168

Environmental Engineering 1,908 2,735 2,263 2,398 2,594 135 196

Hazardous Waste Treatment 5,500 4,819 4,766 4,837 4,994 71 157

Energy Co-generation 7,891 6,769 6,887 7,162 7,155 275 -7

Other 510 408 395 506 361 111 -145

Water/Wastewater Operations 24,196 33,809 30,216 29,926 27,677 -290 -2,249

Solid Waste Management 16,289 34,738 34,009 29,430 24,316 -4,579 -5,114

Total Revenue $141,173 $159,505 $165,784 $155,299 $161,121 -$10,485 $5,822


Environmental Dredging and Restoration: An increase of $8.3 million due to the Cox Creek

Expansion that was comprised of three large construction projects in fiscal 2019: operations

complex relocation; base dike widening; and upland demolition and remediation that were

offset partially by substantial completion of projects in fiscal 2018 including the Dundalk

Marine Terminal Dredging, the Fairfield Marine Terminal Wet Basin Filling, and construction

of two trash interceptors and the Masonville Kurt Iron Slip cut-off dike.

Recycling: An increase of $2.3 million due to a new capital project to expand food waste

processing capacity at Prince George’s County’s Western Branch Composting Facility and a

new project with the Maryland Department of the Environment for scrap tire disposal.

Water/Wastewater Operations: A decrease of $2.2 million for water/wastewater operations

due to the completion of construction activities at the Maryland Correctional Institution (MCI),

Freedom, and Rocky Gap.

Solid Waste Management: A decrease of $5.1 million due to the completion of the Mega Heap

Bunker System for Prince George’s County.



5

As shown in Exhibit 4 – expenses by object – MES’s overall operating expenses increase by

$8.5 million between fiscal 2019 and 2020 but are anticipated to increase by only $5.5 million between

fiscal 2020 and 2021. The major changes between fiscal 2019 and 2020 are increases of $1.9 million in

salaries, wages, and fringe benefits; $1.4 million in technical and special fees; $1.3 million in contractual

services; and $1.0 million in motor vehicle operation and maintenance. The major changes between

fiscal 2020 and 2021 are increases of $1.6 million in salaries, wages, and fringe benefits; $1.1 million in

contractual services; and $0.8 million in land and structures.

Exhibit 4

Operating Expenses Fiscal 2019-2021

Operating Expense

Expenditures

2019

Legislative

Appropriation

2020

Allowance

2021

Change

2019-2020

Change

2020-2021

Salaries, Wages, and Fringe

Benefits $53,814,000 $55,697,000 $57,321,657 $1,883,000 $1,624,657

Technical and Special Fees 10,093,000 11,500,000 11,903,000 1,407,000 403,000

Communication 422,000 500,000 518,000 78,000 18,000

Travel 139,000 300,000 311,000 161,000 11,000

Fuel and Utilities 7,452,000 8,000,000 8,280,000 548,000 280,000

Motor Vehicle Operation and

Maintenance 4,000,000 5,000,000 5,175,000 1,000,000 175,000

Contractual Services 29,154,000 30,500,000 31,568,000 1,346,000 1,068,000

Supplies and Materials 9,253,000 10,000,000 10,350,000 747,000 350,000

Equipment – Replacement 5,311,000 5,500,000 5,693,000 189,000 193,000

Fixed Charges 14,409,000 15,000,000 15,525,000 591,000 525,000

Land and Structures 22,407,000 23,000,000 23,805,000 593,000 805,000

Total Operating Expenses $156,454,000 $164,997,000 $170,449,657 $8,543,000 $5,452,657

Source: Department of Budget and Management

Types of MES Operations

MES’s business type activities can generally be viewed as FFS and revenue-generating

activities. Revenue-generating activities can be further divided into products and services. Before the

sale of the scrap tire recycling facility in January 2008, MES sold recycled crumb rubber products.

Currently, on behalf of its clients, MES produces two products – Leafgro and Leafgro Gold. Leafgro –

composted yard waste such as grass clippings and leaves – and Leafgro Gold – composted food residual

and yard waste – are produced under the contract that MES has to operate composting facilities for

Montgomery and Prince George’s counties; thus, the two counties receive the revenues from sales.



6

However, MES continues to perform three revenue generating services: yard waste grinding; waste oil

collection; and geospatial and engineering services.

Exhibit 5 reflects MES’s revenue generating services. As can be seen, expenses exceeded

revenues for both used oil collection and yard waste grinding in fiscal 2019. MES notes that the

operating loss for used oil collection in fiscal 2019 reflects limited usage of the used oil program since

counties are operating their own programs; drivers are not changing their own oil; and, in general, cars

are needing less oil. The operating loss for yard waste grinding in part reflects one-time increased

revenues in fiscal 2018 due to post-tornado clean-up activities in Queen Anne’s County and the need

for major repairs in fiscal 2019 that kept the tub grinder out of service. The operating gain for geospatial

and engineering services – provided for various environmental planning and monitoring activities –

reflects the ongoing profitability of this revenue generating service, although there is a 16.8% increase

in costs relative to fiscal 2018 due to personnel and equipment costs.

Exhibit 5

Revenue Generating Services Fiscal 2013-2019

($ in Thousands)

2013 2014 2015 2016 2017 2018 2019

Difference

2018-2019

Used Oil Collection Revenue $721 $753 $585 $218 $147 $120 $86 -$34

Expense -368 -338 -301 -242 -80 -126 -87 39

Total $353 $415 $284 -$24 $67 -$6 -$1 $5

Geospatial and Engineering Services

Revenue $2,878 $3,447 $4,549 $4,546 $4,611 $5,291 $6,056 $765

Expense -3,137 -3,404 -4,600 -4,753 -4,460 -5,024 -5,869 -845

Total -$259 $43 -$51 -$207 $151 $267 $187 -$80

Yard Waste Grinding (Tub Grinding)

Revenue $510 $347 $516 $570 $612 $751 $656 -$95

Expense -378 -282 -345 -498 -570 -672 -700 -28

Total $132 $65 $171 $72 $42 $79 -$44 -$123




7

Fiscal 2021 Overview of Agency Spending

The proposed budget discussion focuses on the State reimbursable projects portion of MES’s

budget. As shown in Exhibit 6, there is an adjustment to MES’s fiscal 2021 reimbursable project

charges to State agencies. This adjustment reflects the fact that the fiscal 2021 allowance inadvertently

excluded a portion of the funding for the Department of Public Safety and Correctional Services

(DPSCS) – Dorsey Run Correctional Facility water and wastewater treatment project. This funding is

already reflected in the DPSCS budget. Therefore, MES’s reimbursable project charges to State

agencies increase from $29,360,922 in fiscal 2020 to $29,937,792 in the fiscal 2021 adjusted allowance,

an increase of $576,870, or 2.0%. The two largest changes between fiscal 2020 and the fiscal 2021

adjusted allowance are for salaries, wages, and fringe benefits and contractual services.

Exhibit 7 shows specific project changes between fiscal 2020 and the fiscal 2021 adjusted

allowance. The main change is the $518,924 funding increase for the DPSCS – Dorsey Run

Correctional Facility water and wastewater project. However, this funding increase does not reflect the

true change for the buildings that comprise the Dorsey Run complex. The Dorsey Run complex includes

the following projects and associated funding changes between fiscal 2020 and the fiscal 2021 adjusted

allowance: DPSCS – Dorsey Run Correctional Facility ($518,924); DPSCS – MCI of Women – Jessup

– ($70,484); Maryland Department of Health – Clifton T. Perkins Hospital Center (-$89,329); DPSCS –

Patuxent Institution (-$141,726); and DPSCS – MCI – Jessup (-$267,067). The overall change for these

five facilities, which function as part of one complex, is an increase of $91,286.

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Exhibit 6

Reimbursable Projects Operating Expenses Fiscal 2019-2021 Adj.

Operating Expense

Expenditures

2019

Appropriation

2020

Allowance

2021

Adjustment

2021

Adjusted

Allowance

2021

Change

2019-2020

Change

2020-2021 Adj.

Salaries, Wages, and

Fringe Benefits $14,806,293 $17,125,472 $16,732,880 $600,000 $17,332,880 $2,319,179 $207,408

Technical and Special

Fees 486,208 511,023 517,487 517,487 24,815 6,464

Communication 113,125 117,557 128,295 128,295 4,432 10,738

Travel 3,420 19,296 17,690 17,690 15,876 -1,606

Fuel and Utilities 6,328,456 7,006,570 7,020,668 7,020,668 678,114 14,098

Equipment Operation

and Maintenance 446,264 557,986 587,416 587,416 111,722 29,430

Contractual Services 1,469,139 1,855,951 2,127,975 2,127,975 386,812 272,024

Materials and Supplies 2,145,207 2,167,067 2,106,407 98,974 2,205,381 21,860 38,314

Total Operating

Expenses $25,798,112 $29,360,922 $29,238,818 $698,974 $29,937,792 $3,562,810 $576,870

Note: The fiscal 2021 allowance inadvertently excluded a portion of the funding for the Department of Public Safety and Correctional Services (DPSCS) –

Dorsey Run Correctional Facility water and wastewater treatment project. This funding is already reflected in the DPSCS budget.


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Exhibit 7

Reimbursable Projects Fiscal 2021 Allowance Data

Facilities

Expenditures

2019

Allocation

2020

Allowance

2021

Adjustment

2021

Adjusted

Allowance

2021

Change

2019-2020

Change

Adjusted

2020-2021

DPSCS – Dorsey Run

Correctional Facility $1,728,462 $1,908,326 $1,728,276 $698,974 $2,427,250 $179,864 $518,924

DPSCS – ECI Co-Generation

Facility 7,120,861 8,172,069 8,399,543 0 8,399,543 1,051,208 227,474

DPSCS – MCI – Hagerstown:

Power Generation 3,980,423 4,671,156 4,859,783 0 4,859,783 690,733 188,627

DJS – Cheltenham Youth

Detention Center 530,989 539,256 643,588 0 643,588 8,267 104,332

DPSCS – MCI of Women –

Jessup 261,016 249,783 320,267 0 320,267 -11,233 70,484

DPSCS – Jessup Steam Plant 1,101,898 1,231,645 1,290,196 0 1,290,196 129,747 58,551

Maryland Department of

Veterans Affairs 585,826 579,301 635,194 0 635,194 -6,525 55,893

DPSCS – MCI – Hagerstown 1,734,709 1,884,669 1,921,130 0 1,921,130 149,960 36,461

DJS – Statewide Youth

Centers 397,668 452,306 483,287 0 483,287 54,638 30,981

MDH – Crownsville Hospital

Center 520,004 631,646 661,377 0 661,377 111,642 29,731

DPSCS – WCI 192,645 177,273 203,040 0 203,040 -15,372 25,767

DJS – Victor Cullen Center 330,338 345,406 354,089 0 354,089 15,068 8,683

DNR – Fishing and Boating

Services 59,269 69,473 77,716 0 77,716 10,204 8,243

UMCES – Horn Point 76,433 83,667 88,566 0 88,566 7,234 4,899

Military Department 256,804 252,205 256,104 0 256,104 -4,599 3,899

Maryland Aviation

Administration 24,512 24,642 28,151 0 28,151 130 3,509

St. Mary’s College of

Maryland 70,805 79,193 80,562 0 80,562 8,388 1,369

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Facilities

Expenditures

2019

Allocation

2020

Allowance

2021

Adjustment

2021

Adjusted

Allowance

2021

Change

2019-2020

Change

Adjusted

2020-2021

MDH – Springfield Hospital

Center 507,046 488,652 479,026 0 479,026 -18,394 -9,626

DPSCS – ECI 2,028,055 2,605,484 2,588,783 0 2,588,783 577,429 -16,701

MDH – Clifton T. Perkins

Hospital Center 213,559 204,368 115,039 0 115,039 -9,191 -89,329

DPSCS – Patuxent Institution 545,761 522,273 380,547 0 380,547 -23,488 -141,726

DPSCS – MCI – Jessup 640,676 613,103 346,036 0 346,036 -27,573 -267,067

DNR – Maryland Park

Service 2,890,353 3,575,026 3,298,518 0 3,298,518 684,673 -276,508

Total $25,798,112 $29,360,922 $29,238,818 $698,974 $29,937,792 $3,562,810 $576,870

DJS: Department of Juvenile Services

DNR: Department of Natural Resources

DPSCS: Department of Public Safety and Correctional Services

ECI: Eastern Correctional Institution

MCI: Maryland Correctional Institution

MDH: Maryland Department of Health

UMCES: University of Maryland Center for Environmental Science

WCI: Western Correctional Institution

Note: The fiscal 2021 allowance inadvertently excluded a portion of the funding for the DPSCS – Dorsey Run Correctional Facility water and wastewater treatment

project. This funding is already reflected in the DPSCS budget.

Source: Governor’s Fiscal 2021 Budget Books; Maryland Environmental Service



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Personnel Data

FY 19 FY 20 FY 21 FY 20-21

Actual Working Allowance Change

Regular Positions

845.00

845.00

845.00

0.00

Contractual FTEs

0.00

0.00

0.00

0.00

Total Personnel

845.00

845.00

845.00

0.00

Vacancy Data: Regular Positions

Turnover and Necessary Vacancies, Excluding New

Positions

0.00

0.00%

Positions and Percentage Vacant as of 12/31/19

n/a

n/a

Vacancies Above (Below) Turnover

n/a

Regular positions remain unchanged in the fiscal 2021 allowance. This reflects no change in

anticipated needs.



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Key Observations

1. MES Funding Statement Reflects Agency Priorities

The 2019 Joint Chairmen’s Report included committee narrative requesting an MES funding

statement including information on MES’s undesignated unrestricted net assets, overhead rate, project

reserve fund status, and justification for reimbursable project funding changes. This report request was

in the context of a $3.6 million, or 13.9%, funding increase between fiscal 2019 and 2020 for State

reimbursable projects. The submitted report and prior year information reflect the following.

Undesignated Unrestricted Net Assets: MES considers its undesignated unrestricted net assets

to be its fund balance. MES’ unrestricted undesignated net position increased to $3.4 million in

fiscal 2017 and $4.8 million in fiscal 2018 before decreasing to $4.0 million in fiscal 2019. The

fiscal 2020 estimate for undesignated unrestricted net assets is $3.3 million. MES used a portion

of its undesignated unrestricted net assets in fiscal 2019 to pay for the implementation of the

Workday human resources software and for building expansion costs at its Millersville

headquarters in order to accommodate staff growth and to aggregate staff that are spread among

several buildings including leased space. The building expansion is anticipated to be completed

in calendar 2023. In addition, MES is using its undesignated unrestricted net assets to expand

its program providing health care benefits to retirees beginning in January 2019 since MES

retirees do not participate in the Maryland State Retirement and Pension System. Overall, MES

notes that its fiscal 2019 undesignated unrestricted net assets amount of $4.0 million is

approximately 2.5% of its $156.4 million operating budget. For comparison purposes, the

State’s Rainy Day Fund is required to maintain a 6% balance relative to the State’s operating

budget.

Overhead Rate: An informal goal reflected by MES in the past is to reduce the overhead rate

– general administrative rate – charged to State agencies and other clients as a result of

increasing MES’s client base, thus spreading overhead over more clients. In fact, overhead rates

have trended down in recent years, with the exception of fiscal 2021, as follows: fiscal 2015 –

45.29%; fiscal 2016 – 44.75%; fiscal 2017 – 44.54%; fiscal 2018 – 43.60%; fiscal 2019 –

44.98%; fiscal 2020 – 43.06%; and fiscal 2021 – 46.56%. MES notes that salary and other

personnel increases required to fill vacant positions have resulted in the increased overhead rate

in fiscal 2021. However, MES notes that the group rate charged for water and wastewater

projects, which comprise the majority of State reimbursable projects, has actually decreased

from 14.62% in fiscal 2015 to 5.59% in fiscal 2021 due to efficiencies.

Project Reserve Fund Status: MES has three project reserve funds: the State Reimbursable

Project Contingency Fund; the Eastern Correctional Institution Steam Turbine Contingency

Fund; and the Department of Natural Resources Project Contingency Fund. The fiscal 2019

status of these three project reserve funds is shown in Exhibit 8. The $267,011 shown as

funding returned from the State Reimbursable Project Contingency Fund reflects the funding

that MES overbudgeted in fiscal 2018 for the DPSCS – Jessup Steam Plant project. MES



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subsequently credited this amount to the General Fund from the State Reimbursable Project

Contingency Fund. MES notes that it intends to use funding from the Eastern Correctional

Institution (ECI) Steam Turbine Contingency Fund in fiscal 2020 and 2021 to overhaul the

unit 1 turbine and generator. The funding estimate for the project is $1,129,866, which will thus

reduce the ECI Steam Turbine Contingency Fund balance substantially.

Exhibit 8

General Fund Unearned Revenue Amount Fiscal 2019

Project Reserve Fund Activity Amount Cap Difference

State Reimbursable Project Contingency Fund

Beginning Balance (June 30, 2018) $756,780 Approved Retainage 0 Interest Earned 13,450 Funding Returned -267,011 Current Balance $503,219 $1,000,000 -$496,781

ECI Correctional Institution Steam Turbine Contingency Fund

Beginning Balance (June 30, 2018) $1,202,666 Approved Retainage 0 Interest Earned 0 Current Balance $1,202,666 $1,500,000 -$297,334

DNR Project Contingency Fund

Beginning Balance (June 30, 2018) $3,408 Approved Additions 0 Funds Used 0 Interest Earned 0 Current Balance $3,408 $500,000 -$496,592

DNR: Department of Natural Resources

ECI: Eastern Correctional Institution

Source: Maryland Environmental Service; Department of Legislative Services

Reimbursable Project Funding Changes: MES notes that State reimbursable project cost

increases in recent years are attributable to fuel oil, wood chips, and replacement equipment at

ECI and MCI. In addition, MES notes that it uses all available knowledge to budget for State

projects and that it returns unused State reimbursable project funds to its State partners.



14

Operating Budget Recommended Actions

1. Adopt the following narrative:

Maryland Environmental Service Funding Statement: The committees request that the

Maryland Environmental Service (MES) provide a report on the following:

undesignated unrestricted net assets for fiscal 2020, 2021, and 2022 estimated and an

explanation for any changes between each of these years, including revenues credited

to and expenditures debited from the net assets;

overhead rate for fiscal 2020, 2021, and 2022 estimated;

project reserve fund status by beginning balance, approved retainage, funds used, and

interest earned for fiscal 2020 and 2021 for the State Reimbursable Project Contingency

Fund, the Eastern Correctional Institution Steam Turbine Contingency Fund, and the

Department of Natural Resources Project Contingency Fund; and

justification for the changes in reimbursable project funding for fiscal 2020, 2021, and

2022 estimated based on a discussion about how MES’s undesignated unrestricted net

assets allow for reducing MES’s overhead rate for State reimbursable projects and how

project reserve funds are available for any under budgeting.

The report should be submitted in coordination with the Department of Budget and

Management (DBM) with the fiscal 2022 budget submission.

Information Request

MES funding statement

Authors

MES

DBM

Due Date

Fiscal 2022 budget

submission



15

Appendix 1

2019 Joint Chairmen’s Report Responses from Agency

The 2019 Joint Chairmen’s Report (JCR) requested that the Maryland Environmental Service

(MES) prepare one report. An electronic copy of the full JCR response can be found on the Department

of Legislative Services Library website.

MES Funding Statement Reflects Agency Priorities: The 2019 JCR included committee narrative

requesting an MES funding statement. The funding statement was requested to include information

on MES’s undesignated unrestricted net assets, overhead rate, project reserve fund status, and

justification for reimbursable project funding changes. Further discussion of this data can be found

in Key Observation 1 of this analysis.



16

Appendix 2

Audit Findings

Audit Period for Last Audit: March 24, 2015 – March 10, 2019

Issue Date: January 2020

Number of Findings: 6

Number of Repeat Findings: 2

% of Repeat Findings: 33.3%

Rating: (if applicable) n/a

Finding 1: The Maryland Environmental Service (MES) lacked formal written agreements with State

agencies for 69 facilities to clarify responsibilities of services it performed, as required.

Finding 2: MES obtained services from two vendors totaling $8.4 million using a sole source

procurement method without necessary MES board approval to waive its competitive

procurement procedures. Furthermore, MES did not have a written contract with one of the

vendors.

Finding 3: MES had not established effective controls over the processing of invoice payments.

Finding 4: MES check receipt and deposit procedures were inadequate and duties related to cash

receipts and accounts receivable were not properly segregated.

Finding 5: Human resources and payroll user capabilities were not adequately restricted, and

independent documented reviews of personnel and payroll transactions were not

performed.

Finding 6: MES did not ensure that user access capabilities assigned to employees on its financial

management systems were adequately restricted.

*Bold denotes item repeated in full or part from preceding audit report.

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Appendix 3

Object/Fund Difference Report

Maryland Environmental Service

FY 20

FY 19 Working FY 21 FY 20 - FY 21 Percent

Object/Fund Actual Appropriation Allowance Amount Change Change

Positions

01 Regular 845.00 845.00 845.00 0.00 0%

Total Positions 845.00 845.00 845.00 0.00 0%

Objects

01 Salaries and Wages $ 53,814,000 $ 55,697,000 $ 57,321,657 $ 1,624,657 2.9%

02 Technical and Spec. Fees 10,093,000 11,500,000 11,903,000 403,000 3.5%

03 Communication 422,000 500,000 518,000 18,000 3.6%

04 Travel 139,000 300,000 311,000 11,000 3.7%

06 Fuel and Utilities 7,452,000 8,000,000 8,280,000 280,000 3.5%

07 Motor Vehicles 4,000,000 5,000,000 5,175,000 175,000 3.5%

08 Contractual Services 29,154,000 30,500,000 31,568,000 1,068,000 3.5%

09 Supplies and Materials 9,253,000 10,000,000 10,350,000 350,000 3.5%

10 Equipment – Replacement 5,311,000 5,500,000 5,693,000 193,000 3.5%

13 Fixed Charges 14,409,000 15,000,000 15,525,000 525,000 3.5%

14 Land and Structures 22,407,000 23,000,000 23,805,000 805,000 3.5%

Total Objects $ 156,454,000 $ 164,997,000 $ 170,449,657 $ 5,452,657 3.3%

Funds

07 Nonbudgeted Fund $ 156,454,000 $ 164,997,000 $ 170,449,657 $ 5,452,657 3.3%

Total Funds $ 156,454,000 $ 164,997,000 $ 170,449,657 $ 5,452,657 3.3%

Note: The fiscal 2020 appropriation does not include deficiencies, planned reversions, or general salary increases. The fiscal 2021 allowance does

not include contingent reductions or general salary increases. .

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Operating Budget Summarymgaleg.maryland.gov/Pubs/BudgetFiscal/2021fy-budget-docs...and engineering...

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